Health Care Reform Lawsuits Likely Headed to Supreme Court

With historic legislation comes litigation challenging it, and no one expected the health care reform law to be an exception. After a bloody congressional battle over the Patient Protection and Affordable Care Act, President Obama signed it into law in March 2010--and the lawsuits began surfacing quickly.

A milestone in the litigation came Dec. 13, 2010, when a federal judge struck down a key provision of the law in Cuccinelli v. Sebelius, a challenge brought by the state of Virginia. Judge Henry Hudson of the Eastern District of Virginia struck down the health care law's individual mandate to buy health insurance or risk fines, finding it falls outside the scope of the commerce clause and is therefore unconstitutional.

According to Timothy Jost, a professor at Washington and Lee University School of Law and a health care law expert, Hudson's ruling makes the suit the first to succeed after the government prevailed in 14 other cases, at least two of which expressly addressed the commerce clause issue. On Nov. 30, Judge Norman Moon of the Western District of Virginia rejected the argument and upheld the individual mandate, dismissing the lawsuit brought by Liberty University, the Christian college Rev. Jerry Falwell founded. Judge George Steeh of the Eastern District of Michigan did the same Oct. 7 in a challenge brought by the conservative Christian Thomas More Law Center.

Hudson's ruling in Virginia reversed the trend, propelling the issue one step closer to the Supreme Court.

"There's very little doubt, in my opinion, where this is headed," says Gerry Niederman, a partner at Faegre & Benson. "Right now we have conflict, different decisions by different courts, and now two different district courts in the same state with two different opinions. There's a strong likelihood the decisions will be appealed, and then it's widely assumed that the U.S. Supreme Court will ultimately hear one or more of those appeals."

The Choice is Not Yours

The lawsuits challenging the health care law--estimates put the number of suits around 20--have raised a multitude of arguments (see "Side Claims"), but almost all of them assert the commerce clause argument against the individual mandate.

"The individual mandate is the issue that has really captured the focus here," Niederman says. "The basic idea is that it is an attempt by Congress to regulate not economic activity, but rather economic inactivity--the idea being that the government, as broad as it may be, can't force individuals to do something they wouldn't otherwise do."

The argument found first-time success in the Eastern District of Virginia. Hudson wrote in his opinion that no identifiable case law has ever extended the commerce clause to a person's decision not to purchase a product.

"The unchecked expansion of congressional power to the limits suggested by the Minimum Essential Coverage Provision would invite unbridled exercise of federal police powers," Hudson wrote. "At its core, this dispute is not simply about regulating the business of insurance--or crafting a scheme of universal health insurance coverage--it's about an individual's right to choose to participate."

The counterargument, which has surfaced in all three of the cases in which there have been determinations, says that choice to participate doesn't really exist as long as the costs of care for the uninsured are driving up costs in the marketplace.

As Judge Steeh put it in his dismissal of the Thomas More Law Center suit, "The plaintiffs have not opted out of the health care services market because, as living, breathing beings, who do not oppose medical services on religious grounds, they cannot opt out of this market... How participants in the health care services market pay for such services has a documented impact on interstate commerce."

Steeh concluded that commerce clause power more accurately reaches economic "decisions" rather than "activity," a broader interpretation backed by the government.

In the Western District of Virginia case that Judge Moon dismissed, he similarly concluded that "decisions to pay for health care without insurance are economic activities."

Precedent and Politics

Robert Muise, senior trial counsel at the Thomas More Law Center, says such readings of the commerce clause are a troubling break from precedent. "It's dangerous precedent, because it means Congress could force you into activity," he says. "I think Judge Hudson got it 100 percent correct."

If the scorecard is currently 2-1, it may soon be tied. The federal judge in Florida, who on Dec. 16 heard oral arguments in a case brought by 20 states, has indicated he's unconvinced by the government's broad reading of the commerce clause. "At this stage in the litigation, this is not even a close call," Judge Roger Vinson wrote in an earlier denial of a motion to dismiss the case. Although federal district court decisions are not binding, Muise says they are certainly persuasive to other courts.

Niederman sees the issue differently. "In context, it has been assumed for perhaps the last 75 years or so that Congress' power to regulate commerce was very, very broad and would rarely be invalidated," he says. "Many very smart law professors and scholars would have thought this was a flimsy argument at best, but in fact at least one judge has agreed that this reach of the federal government needs to be limited, and this is the basis by which it's been limited."

In many ways, Niederman says, it's a question of political philosophy as much as a question of law. On that point, he nears agreement with Muise.

"The essence of all of these lawsuits is the fundamental question: What is the relationship of the federal government vis-?-vis the private citizen and/or [as in the case of separate claims against Medicaid expansions] the state?" Muise says. "From [the Law Center's] perspective, these cases transcend the whole health care debate, and that's why we have an interest in this case."

They also should transcend partisanship, he says. Power is given to government positions, after all, and the people in those positions change.

Mitch Goldman, a partner at Duane Morris, sees a clear partisan divide, however, and says that provides for some easy predictions. A number of cases, for instance, are lined up in the conservative Florida courts, which are widely expected to strike down portions of the bill, he says. A few decisions like that will catch the eye of the Supreme Court.

"They'll have a hard time walking away from it," Goldman says. "And this court will find very, very narrow reasons for overturning things. They won't necessarily go with every little precedent; they're always looking for some nuance. These cases will definitely stop in its tracks any progress in health care reform if we're not careful."

Key Driver

Judge Hudson ruled that the individual mandate is severable, so even if the Supreme Court strikes it down, experts think it's unlikely to take down the entire health care law. But it seems integral to health care reform's implementation, regardless of what people think of its constitutionality.

As pointed out by the judges who dismissed the Michigan and Western District of Virginia lawsuits, enlarging the pool of the insured underpins other key measures of the health care law, such as prohibiting insurers from denying coverage to individuals with pre-existing conditions.

"In order to do that in an economically reasonable way, many think that unless you require healthy people everywhere to be in the insurance pool, it's not possible to spread the risk of those higher-cost people in a way that won't send insurance premiums skyrocketing," Niederman says. "If Judge Hudson's decision is upheld, it will complicate the effort to sell affordable health care."